Reason 7 - Economies of Scale

[Jorge Abreu]

Reason 7 on Why the Wealthy Invest in Real Estate!

Economies of Scale

✨This one is simple - the more units under management, the higher your ability will be to lower expenses (think cost per unit), thus driving up the NOI. This is particularly true when using a property management company or undertaking renovations.

Property managers will lower their cost of onsite management the more units that you have, even better if they’re in a more condensed area (as opposed to 100 SFHs spread throughout town).

🚧When thinking of renovations, the contractor's price per unit will be lower the higher the number of units, and the same for suppliers of renovation materials – flooring, appliances, doors, siding, paint, etc...

For instance, we order in bulk for all of our renovations and keep inventory and for doing so we get large discounts. We also don't have to wait on suppliers for our materials since we get them all upfront.

In this case, the more units the better!!🙌